https://consumer.ftc.gov/consumer-alerts/2023/03/it-really-irs?utm_source=govdelivery
Consumer Alert
Is it really the IRS?
By
Kira Krown
Consumer Education Specialist, FTC
March 30, 2023
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The “IRS” is on the phone. They’re saying you owe back taxes and need to pay immediately using cryptocurrency, or you’ll be arrested. You reach for your wallet but then think — WAIT — is this really the IRS? Or is it someone impersonating the IRS?
According to the latest FTC data, impersonation scams were the top reported scam in 2022. The FTC got more than 700,000 reports about impersonation scams, with one in five including loss of money.
So, what do impersonation scams usually look like? Someone may call, tell you they’re from a government agency, and say you owe taxes or a fine. Or they may pretend to be a family member or friend in trouble, who needs money right away. They may pose as someone from a tech support company and claim there’s a problem with your computer. Or pretend they’re a love interest who needs an expensive medical procedure.
What’s the common theme? They’re not who they say they are, and what they really want is your money or personal information.
Here’s how to avoid impersonators:
- Don’t give your personal or financial information to anyone who contacts you out of the blue. Government agencies won’t call, email, text, or message you on social media to ask for personal information, like your Social Security or bank account numbers.
- Know how scammers tell you to pay. Never pay anyone who insists you pay with cryptocurrency, a wire transfer service like Western Union or MoneyGram, or a gift card.
- Don’t trust your caller ID. Your caller ID might show an actual government agency or company’s name or phone number. But caller ID can be faked. It could be anyone calling from anywhere in the world.
- Don’t click on links in unexpected emails or text messages. And never give remote access to your computer to anyone who contacts you unexpectedly.
Come across an impersonation scam? Report it to the FTC: ReportFraud.ftc.gov.
This month we’ll be discussing the #FTCTopFrauds of 2022 — stay tuned!
Scams
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Consumer Alert
Avoid scammers trying to profit from a deadly tornado
By
Gema de las Heras
Consumer Education Specialist, FTC
March 29, 2023
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Every time there’s a natural disaster — like the tornado that tore through Mississippi and neighboring states — scammers are quick to follow. How do they exploit tragedy to steal from people who have lost everything? Read on to learn how to avoid these scams.
If you’re in a disaster relief area designated by FEMA, there’s legitimate help on the way. For example, if you’re in a qualified area, the IRS is extending many of its filing and payment deadlines until July 31, 2023. To see if your area qualifies, visit the disaster relief page on IRS.gov.
Disaster recovery scams come in many forms, but mostly these scammers pretend to offer legitimate help. Here are some ways to spot and avoid these scams:
- Ask for official identification. Scammers might pretend to be safety inspectors, government officials trying to help you, or utility workers who say immediate work is required. Don’t give them money. And always ask for identification to verify who you’re dealing with — before sharing personal information like your Social Security or account numbers.
- Don’t pay to apply for FEMA assistance. If they say you need to pay to qualify for FEMA funds, it’s a scam. The best place to get information from FEMA is from FEMA.gov or by downloading the FEMA Mobile App to get alerts and information.
- Look out for clean-up and repair scams. Unlicensed contractors and scammers may appear in recovery zones with promises of quick repairs or clean-up services. Walk away if they demand cash payments up front, or refuse to give you copies of their license, insurance, and a contract in writing.
- Steer clear of rental listing scams. Scammers know people need a place to live while they rebuild. They’ll advertise rentals that don’t exist to get your money and run. Never wire or give money for a deposit or rent before you’ve met or signed a lease.
- Share resources from Dealing with Weather Emergencies with those in your community. You’ll find advice and infographics to help you get the word out about disaster scams.
Visit ftc.gov/WeatherEmergencies for more, and report weather-related scams to the FTC at ReportFraud.ftc.gov.
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Business Blog
Chatbots, deepfakes, and voice clones: AI deception for sale
By
Michael Atleson, Attorney, FTC Division of Advertising Practices
March 20, 2023
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You may have heard of simulation theory, the notion that nothing is real and we’re all part of a giant computer program. Let’s assume at least for the length of this blog post that this notion is untrue. Nonetheless, we may be heading for a future in which a substantial portion of what we see, hear, and read is a computer-generated simulation. We always keep it real here at the FTC, but what happens when none of us can tell real from fake?
In a recent blog post, we discussed how the term “AI” can be used as a deceptive selling point for new products and services. Let’s call that the fake AI problem. Today’s topic is the use of AI behind the screen to create or spread deception. Let’s call this the AI fake problem. The latter is a deeper, emerging threat that companies across the digital ecosystem need to address. Now.
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Most of us spend lots of time looking at things on a device. Thanks to AI tools that create “synthetic media” or otherwise generate content, a growing percentage of what we’re looking at is not authentic, and it’s getting more difficult to tell the difference. And just as these AI tools are becoming more advanced, they’re also becoming easier to access and use. Some of these tools may have beneficial uses, but scammers can also use them to cause widespread harm.
Generative AI and synthetic media are colloquial terms used to refer to chatbots developed from large language models and to technology that simulates human activity, such as software that creates deepfake videos and voice clones. Evidence already exists that fraudsters can use these tools to generate realistic but fake content quickly and cheaply, disseminating it to large groups or targeting certain communities or specific individuals. They can use chatbots to generate spear-phishing emails, fake websites, fake posts, fake profiles, and fake consumer reviews, or to help create malware, ransomware, and prompt injection attacks. They can use deepfakes and voice clones to facilitate imposter scams, extortion, and financial fraud. And that’s very much a non-exhaustive list.
The FTC Act’s prohibition on deceptive or unfair conduct can apply if you make, sell, or use a tool that is effectively designed to deceive – even if that’s not its intended or sole purpose. So consider:
Should you even be making or selling it? If you develop or offer a synthetic media or generative AI product, consider at the design stage and thereafter the reasonably foreseeable – and often obvious – ways it could be misused for fraud or cause other harm. Then ask yourself whether such risks are high enough that you shouldn’t offer the product at all. It’s become a meme, but here we’ll paraphrase Dr. Ian Malcolm, the Jeff Goldblum character in “Jurassic Park,” who admonished executives for being so preoccupied with whether they could build something that they didn’t stop to think if they should.
Are you effectively mitigating the risks? If you decide to make or offer a product like that, take all reasonable precautions before it hits the market. The FTC has sued businesses that disseminated potentially harmful technologies without taking reasonable measures to prevent consumer injury. Merely warning your customers about misuse or telling them to make disclosures is hardly sufficient to deter bad actors. Your deterrence measures should be durable, built-in features and not bug corrections or optional features that third parties can undermine via modification or removal. If your tool is intended to help people, also ask yourself whether it really needs to emulate humans or can be just as effective looking, talking, speaking, or acting like a bot.
Are you over-relying on post-release detection? Researchers continue to improve on detection methods for AI-generated videos, images, and audio. Recognizing AI-generated text is more difficult. But these researchers are in an arms race with companies developing the generative AI tools, and the fraudsters using these tools will often have moved on by the time someone detects their fake content. The burden shouldn’t be on consumers, anyway, to figure out if a generative AI tool is being used to scam them.
Are you misleading people about what they’re seeing, hearing, or reading? If you’re an advertiser, you might be tempted to employ some of these tools to sell, well, just about anything. Celebrity deepfakes are already common, for example, and have been popping up in ads. We’ve previously warned companies that misleading consumers via doppelgängers, such as fake dating profiles, phony followers, deepfakes, or chatbots, could result – and in fact have resulted – in FTC enforcement actions.
While the focus of this post is on fraud and deception, these new AI tools carry with them a host of other serious concerns, such as potential harms to children, teens, and other populations at risk when interacting with or subject to these tools. Commission staff is tracking those concerns closely as companies continue to rush these products to market and as human-computer interactions keep taking new and possibly dangerous turns.
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For Release
FTC Seeks Public Comment on Franchisors Exerting Control Over Franchisees and Workers
Public urged to provide input on franchise agreements and franchisor business practices
March 10, 2023
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- Office of Policy Planning
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- Franchises, Business Opportunities, and Investments
The Federal Trade Commission requests comment on franchise agreements and franchisor business practices, including how franchisors may exert control over franchisees and their workers.
In a franchise relationship, franchisees typically pay a fee in exchange for a business format or system developed by a franchisor, the right to use the franchisor’s trademark for a specific number of years, and assistance. Owning a franchise, however, comes with defined costs, franchisor controls, and contract terms.
The FTC would like to know more about how franchisors may exert control over franchisees and their workers. Specifically, the FTC is interested in how franchisors disclose certain aspects and contractual terms of the franchise relationship, as well as the scope, application, and effect of those aspects and contractual terms.
“Amidst growing concern around unfair and deceptive practices in the franchise industry, the FTC hopes to hear from a broad range of stakeholders about how the franchise relationship is working, and how it is not,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “This cross-agency effort will inform our policy and enforcement efforts as we work to ensure a fair marketplace for franchisees.”
“It’s clear that, at least in some instances, the promise of franchise agreements as engines of economic mobility and gainful employment is not being fully realized,” said Elizabeth Wilkins, Director of the FTC’s Office of Policy Planning. “This RFI will begin to unravel how the unequal bargaining power inherent in these contracts is impacting franchisees, workers, and consumers.”
As part of the Request for Information, the FTC is asking franchisors, franchisees, current and past employees of franchisors and franchisees, government entities, economists, attorneys, academics, consumers, and other interested parties to weigh in on a wide array of issues that affect franchisees and their workers, such as:
- franchisees’ ability to negotiate the terms of franchise agreements before signing, and the ability of franchisors to unilaterally make changes to the franchise system after franchisees join;
- franchisors’ enforcement of non-disparagement, goodwill or similar clauses;
- the prevalence and justification for certain contract terms in franchise agreements;
- franchisors’ control over the wages and working conditions in franchised entities, other than through the terms of franchise agreements;
- payments or other consideration franchisors receive from third parties (e.g., suppliers, vendors) related to franchisees’ purchases of goods or services from those third parties;
- indirect effects on franchisee labor costs related to franchisor business practices; and
- the pervasiveness and rationale for franchisors marketing their franchises using languages other than English.
The public will have 60 days to submit comments at Regulations.gov. Once submitted, comments will be posted to Regulations.gov.
Apart from this Request for Information, the FTC is seeking public comment on a proposed rule to ban noncompete clauses for workers in some situations. As part of that proposed rulemaking, the FTC is interested in public comments on the question of whether that proposed rule should also apply to noncompete clauses between franchisors and franchisees. Comments related to the use of noncompete restrictions in franchise agreements should be submitted as part of the noncompete rulemaking through April 19, 2023. This Request for Information is separate from the noncompete rulemaking proceeding. Similarly, this Request for Information is separate from the Franchise Rule regulatory review. Any comments submitted in response to this Request for Information will not automatically become part of either the noncompete rulemaking proceeding or the Franchise Rule regulatory review record.
The lead staff attorneys on this matter are Christine M. Todaro and Josh Doan from the FTC’s Bureau of Consumer Protection and Alex Petros from the FTC’s Office of Policy Planning.
The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.
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